How China went from one of the Poorest to The Global Economic Superpower
China grew from a poor, struggling country to an economic superpower.
- According to the World Bank, China has “experienced the fastest sustained expansion by a major economy in history”.
- Deng Xiaoping ended the relative economic isolation of China and introduced market-based reforms
In the recent past, China has become an economic superpower, manufacturer, merchandise trader, and holder of foreign exchange.
Nearly 40 years ago, before the economic reforms and trade liberation, China had politics that kept its economy stagnant, poor and ineffective as compared to the global economy.
After facilitating foreign trade, investment, and implementing free-market reforms in 1979, China has become the world’s second-largest economy.
China shows improvement when the communist party took charge in 1979.
According to the World Bank, China has “experienced the fastest sustained expansion by a major economy in history”.
President Xi Jinping referred to the transitioning economy of China as “new normal”, where expansion is counting more on drivers like consumption and services than investment and exports.
Since Mao in 1953, the Chinese government has followed several five years plan. The country is now in its 13th Five Year Plan (2016-2020).
Targets of 13th Five-Year Plan
Bottom line: Double GDP per capita
R&D expenditure: GDP from 2.1% to 2.5%
Urbanization rate: Population from 56.1% to 60%
Green development: Reduce emissions from 45% to 40%
Free Market Economy
In 1978, China first started to move away from a centrally planned economy towards a market-based economy. Mao’s successor Deng Xiaoping ended the relative economic isolation of China.
China is spending a huge amount of money on Research &Development (R&D) department. Furthermore, a lot of investment is being done in high-tech industrial parks focusing on technologies like artificial intelligence, robotics, and big data.
Huge companies like Alibaba, Tencent, and Baidu are investing billions in China. As of 2018, China is the second-largest country having unicorn companies that are worth at least $1 billion or more.
Special Economic Zones
In the initial phase of economic growth, foreign investment was encouraged. Special economic zones are based on free-market; the government of China gives flexible government measures, compared to the more planned economy.
In the end, the President of China Xi Jinping to reform the economy authorized the “Made in China 2025” plan.
China has become a world leader in solar technology. It is cutting back on exports, including steel and coal production.
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